Clients were fed false reports about Easy Equity Management's returns and more than $2 million of their funds was misappropriated, the civil suit alleges.

The Securities and Exchange Commission filed a civil lawsuit Thursday against two operators of a Los Angeles hedge fund, accusing them of making false statements about the fund's performance and misappropriating more than $2 million of clients' funds.

Alero Odell Mack and Steven Enrico Lopez, who operated Easy Equity Management Inc., allegedly obtained $4 million from 25 investors from 2007 until March of this year by overstating past returns and falsely claiming that Mack had unique access to the New York Stock Exchange trading floor.

One investment brochure produced by Easy Equity advertised a 70% return and another claimed the firm had obtained "staggering returns time and time again," the SEC said in the suit filed in federal court in Los Angeles. The suit also alleged that Mack falsely claimed to be a licensed real estate broker and a "funding partner" with JPMorgan Chase & Co.

The SEC said the fund managers invested just $1.3 million of client funds, spending the balance on personal expenses and on referral fees paid to investors who brought them new clients. Mack, 45, a Los Angeles resident, allegedly spent $500,000 of investor money on personal expenses, while Lopez, 52, who lives in Beverly Hills, allegedly spent $577,000 on himself.

Neither Mack nor Lopez could be reached for comment and their lawyers did not return telephone messages.

The lawsuit seeks an order that would require the two men to return any "ill-gotten gains," plus penalties.